Then-German Chancellor Angela Merkel attended a press conference after meeting with Belgian Prime Minister Alexander De Cru at the Egmont Palace in Brussels on October 15, 2021. JOHN THYS / AFP / Getty Images
Germany has condemned Russia’s invasion of Ukraine. It increased its defense budget and sent weapons to the Ukrainian military. It has launched a series of sanctions against Russia and some of its billionaires. This week in Hamburg, German authorities detained a superyacht owned by the family of Alisher Usmanov, a Russian industrial oligarch closely associated with President Vladimir Putin.
Yet Germany’s role as the European Union’s largest buyer of Russian oil and natural gas continues largely unhindered, making it the number one financier in the EU in Mr Putin’s nasty war and a civilian slaughterhouse. Germany’s reliance on Russian energy explains why the coalition government led by Chancellor Olaf Scholz opposes stopping Russian oil and gas; he knows that this will throw the EU’s largest economy into a grueling recession – and turn off the lights and possibly his political career.
How did Germany become so dependent on Russian energy?
While former Chancellor Gerhard Schroeder has been described as one of Mr Putin’s useful idiots on the energy front, it was his successor, Angela Merkel, the chancellor from 2005 to late last year, who took Mr Schroeder’s friendly stance and strengthened it.
Since retiring, Ms Merkel has not covered herself, claiming she spends her time writing her memoirs. She broke her silence earlier this month to insist she was behind her decision to block Ukraine’s bid to join NATO at the 2008 military summit in Bucharest. She made the statement a day after as Ukrainian President Vladimir Zelensky suggested that his country was under siege as a direct result of this decision, which was backed by then-French President Nicolas Sarkozy.
Ms Merkel did not apologize for pursuing Mr Putin’s disastrous policy of appeasement, taking so much of the oil and gas offered to him. Germany’s energy risks are the highest in the EU, as it is the country most dependent on Russian oil and gas. Prices for both goods began to rise before the war on February 24. As a result, German inflation of 7.3% in March reached its highest level in more than 40 years.
For Germany, the only thing worse than financing Putin’s war by paying record or near-record prices for Russian hydrocarbons is not paying for them at all. Russia’s exports could disappear if Putin takes revenge on EU sanctions by turning off the taps. He is already pushing for payments to be made in rubles, not euros or dollars; Germany and other EU countries consider payments in rubles to be in breach of contract.
Mr Putin’s German pampering began in earnest with Mr Schroeder, the Social Democratic Chancellor from 1998 to 2005. He became a friend of Mr Putin and in a 2004 television interview called Mr Putin a “flawless democrat”. to Russia in general, and Mr Putin in particular has confused some European and German opposition leaders, although several political strategists have suggested that his position is simply an intensified version of New Ostpolitik – German language for the new eastern policy. Politics that began in the 1960s, long before the end of the Cold War, argued that building greater economic and political ties with Russia would create greater continental security by moving Russia to the European tent.
Mr Schroeder added a strong trade element to the policy, identifying Germany as a major customer of Gazprom’s PJSC, the Kremlin-controlled gas giant and the world’s largest gas exporter. He was one of the main champions of the first Nord Stream gas pipeline, which delivered gas directly from Russia to Germany, bypassing Ukraine.
In the weeks following his defeat in the 2005 election, he became chairman of the Nord Stream shareholders’ committee, convincing proof that he is one of the Kremlin’s preferred European allies and lobbyists. There is no way he can be appointed without Mr Putin’s approval.
Since then, Mr Schroeder has become firmly entrenched in Russia’s vast hydrocarbon industry. He is chairman of the Rosneft Oil Company, a state-controlled oil giant, and was nominated as a member of Gazprom’s board before the war began. He is due to take up the position in June, but is under political pressure not to approach the company.
Ms Merkel took a more skeptical and cautious stance towards Mr Putin, but eventually allowed herself to be sucked into Putin’s great geoeconomic energy game. She supported the construction of Nord Stream 2, the twinning of the first Nord Stream pipeline, which would double Russia’s capacity to export gas to Germany (the pipeline was fully built, but Mr Scholz canceled the certification process when the war began).
Most importantly, in 2011, immediately after the Fukushima nuclear accident in Japan, she endorsed Mr Schroeder’s decision to shut down all nuclear power plants in Germany when he could easily cancel it – she was highly critical of the former chancellor. She ignored warnings from the West, especially from Americans, that removing the plants – the last three reactors – should close this year – would make Germany dangerously dependent on Russian gas, oil and coal. They were right.
Today, about 40 percent of German gas comes from Russia, with imports worth nearly $ 1 billion a week. Russia also supplies about a third of Germany’s oil and half of its coal. There is no denying that hydrocarbon sales directly finance Russia’s war against Ukraine. In 2021, about 35% of Russia’s budget revenues come from oil and gas sales, according to the European Center for Economic Reform.
Germany is trying hard to give up Russian hydrocarbons, but given its huge dependence on fuels, this process will take many years. But it will happen at a great cost. Germany, meanwhile, is both an economic supporter of the war and a victim of the astonishingly bad decisions that have made it dependent on Putin’s energy exports. Mr Schroeder deserves some of the blame, Mrs Merkel even more. The war will contribute to a reassessment of her often praised role as a liberal economic and democratic star of Europe.
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